REI

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 11:00 a.m. ET Chairman of the Board and Chief Executive Officer - Paul McKinney Executive Vice President, Chief Financial Officer and Treasurer - Sundip Johl Executive Vice President and Chief Exploration Officer - James Parr Executive Vice President and Chief Operations Officer - Alex Dyes Senior Vice President of Operations - Shawn Young Investor Relations Coordinator - Al Petrie Operator: Good day, and welcome to Ring Energy's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would like now to turn the conference over to Mr. Al Petrie of Investor Relations Coordinator. Al Petrie: Thank you, Operator, and good morning, everyone. We appreciate your interest in Ring Energy. We'll begin our call with comments from Paul McKinney, our Chairman of the Board and CEO, who will provide an overview of key matters for the second quarter of 2026. We will then turn the call over to Sundip Johl, Ring Energy's Executive VP, Chief Financial Officer and Treasurer, who will review our financial results. Paul will then return with some closing comments before we open up the call for questions. Joining us on the call today are James Parr, Executive VP and Chief Exploration Officer; Alex Dyes, Executive VP and Chief Operations Officer; and Shawn Young, Senior VP of Operations. During the Q&A session, we ask you to limit your questions to one and a follow-up. You're welcome to re-enter the queue later with additional questions. I would also note that we have posted an updated corporate presentation on our website. During the course of this conference call, the company will be making forward-looking statements within the meaning of federal securities laws. Investors are cautioned that forward-looking statements are not guarantees of future performance, and those actual results or developments may differ materially from those projected in the forward-looking statements. Finally, the company gives no assurance that such forward-looking statements will prove to be correct. Ring Energy disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in yesterday's press release and in our filings with the SEC. These documents can be found in the Investors section of our website located at www.ringenergy.com. Should one or more of these risks materialize or should underlying assumptions prove incorrect, actual results may vary materially. This conference call also includes references to certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable measure under GAAP are contained in yesterday's earnings release. Finally, as a reminder, this conference call is being recorded, and I would now like to turn the call over to Paul McKinney, our Chairman and CEO. Paul McKinney: Thank you, Al, and good morning, everyone, and thank you for joining us. Before discussing the quarter, I'd like to spend a moment on the broader commodity backdrop because it continues to influence how we think about capital allocation, spending levels, and long-term value creation. My view remains that the current market continues to underestimate the impact of long-term global oil fundamentals that are likely to continue influencing crude oil prices long after the current crisis involving Iran and the Strait of Hormuz is resolved. Global demand continues to grow, driven in large part by developing economies seeking higher standards of living, while current industry investment has remained relatively constrained as it has in recent years. These geopolitical events have reinforced the importance of energy security and have highlighted structural pressures throughout the global supply chain that suggest additional future demand. In my opinion, pre-war supply levels and strategic petroleum reserves have helped bridge the supply gap created by the Persian Gulf conflict, but they cannot serve as a long-term substitute for the upstream investment required to meet growing demand. Yet today, the forward strip continues to imply a market that eventually moves into surplus. Our view is different. We believe the industry will ultimately require higher commodity prices to incentivize the level of investment necessary to meet future growing demand. If investment continues to lag, the risk is not oversupply, but rather a tighter market than many currently anticipate. Now, regardless of whether our commodity outlook proves exactly right, Ring strategy is designed, as you know, to succeed across commodity cycles. Our focus remains on disciplined capital allocation, capital efficiency, balance sheet improvement, and generating durable free cash flow for stockholders no matter what the price environment. The second quarter provided a good example of that approach in action. While oil prices moved materially higher during the quarter, our hedge position limited our participation in a portion of that upside. It is important to remember that those hedges were established earlier in the year when the forward market reflected a significantly weaker commodity price outlook, and were intended to protect our cash flow, our 2026 development plan, and meet our debt reduction goals. Had oil prices not improved in the second quarter, we believe our strategy would have achieved our objectives, allowing us to execute our development program as planned. However since oil prices were stronger during the quarter, we continued delivering on priorities within our control. The equity offering we completed gave us the balance sheet capacity to fund the acceleration of our development transition without losing focus on debt reduction. Rather than choosing between strengthening the balance sheet and investing in the highest return phase of our development plan, the timing of this raise allowed us to do both. Taken together, we believe these actions demonstrate the value of disciplined capital allocation and execution across commodity cycles. As part of our ongoing portfolio management, we are also continuing to evaluate select non-core assets that don't fit our long-term development plans. Any proceeds from potential dispositions and/or transactions will be directed towards further debt reduction consistent with our capital allocation priorities. Operationally, we drilled seven wells and completed four wells during the quarter. In the Northwest Shelf, we drilled and completed one 1.5-mile horizontal well and one 1-mile horizontal well. In the Central Basin Platform, we drilled and completed one 1.5-mile horizontal well in Andrews County and one 1.5-mile horizontal well in Crane County. We drilled 3 additional 2-mile horizontal wells in Crane County that were not yet completed at quarter end. As of June 30th, we were also in the process of drilling one saltwater disposal well in Crane County. Now, what gives us confidence in our strategy is the growing consistency we're seeing across the asset base. Each well improves our understanding of spacing, landing zones, completion design, and development sequencing, strengthening our confidence in both inventory quality and development economics. Importantly, our focus today is no longer centered on proving the resource. Instead, it is increasingly about optimizing development, improving returns, maximizing the value of, and expanding our inventory. To help you understand what we mean by our focus on completing this transition, it is important for you to understand that we believe our undeveloped conventional assets are at a similar stage of evolution to what the broader industry experienced over the last decade when advances in drilling and completion techniques unlocked significant value from the unconventional reservoirs in the Delaware and Midland basins. Before industry could drill and complete longer lateral wells and co-develop multiple benches, they had to invest in frack water storage ponds, centralized production facilities, and produced saltwater disposal wells and facilities. Earlier this year, as we began transitioning to longer lateral wells and co-development of our stacked pay areas, we required similar investments. Continuing these investments will allow us to improve capital efficiency, expand inventory depth, and enhance long-term returns. Some of these investments are summarized on slide 17 of our investor deck. So what does all of this mean for 2026 and 2027? Last quarter, we shared that we were accelerating the investments to transition our operations to achieve the focus we just described. This quarter, we continued the acceleration of these important investments and are updating our 2026 guidance and providing initial guidance for 2027. For the second half of '26, we now expect oil sales volumes to range between 13,000 and 13,950 barrels of oil per day for a midpoint guidance increase of approximately 2%. With respect to operating costs, we now expect LOE per barrel to range between $10.00 and $10.60 per BOE for a midpoint guidance decrease of approximately 2%. With respect to capital spending, we now plan to spend between $80 million and $100 million during the last half of the year, bringing our total capital spending for the full year of 2026 to between $158 million and $178 million. We believe this expansion is necessary for our transition to our development plan of improved capital efficiency that delivers superior economic returns, lower capital intensity, and higher cash flow generating potential than our historical performance. We also expect to fund this expanded plan primarily through operating cash flow, with our debt trending down to our leverage ratio goal of 1.25x. Focusing on our initial guidance for 2027, we expect oil sales to range between 13,550 to 14,650 barrels of oil per day, and BOE sales volume to range between 21,500 and 23,500 barrels of oil equivalent per day for midpoint guidance growth of approximately 10% over estimated 2026 BOE sales. With respect to operating costs, we expect 2027 LOE per barrel to range between $9.80 and $10.60 per BOE for a midpoint guidance decrease of approximately 1%, demonstrating our confidence in our team's historical focus on future operating cost reduction. Regarding 2027 capital spending, we are initially guiding to a range of $135 million to $165 million for a midpoint reduction of approximately 10% compared to estimated 2026 capital spending. We believe this outlook reflects the quality of our asset base, the depth of our inventory, and the benefits of the investments we've made positioning the company to deliver improved returns and sustainable growth in 2027 and beyond. With that, I'll turn the call over to Sundip to review our financial results, balance sheet, and outlook in greater detail. Sundip? Sundip Johl: Thank you, Paul. I will focus my remarks on the quarter's financial results, continued balance sheet improvement, and the financial implications of the outlook Paul discussed earlier. Starting with production, second quarter total BOE sales volumes were within our guidance range, averaging 19,990 BOE per day, up from 19,351 BOE per day in the first quarter, a sequential increase of 3%. Oil sales volumes for the quarter averaged 12,683 barrels of oil per day. Realized pricing improved meaningfully during the quarter, driven primarily by stronger oil prices. Our overall realized price increased 36% to $57.55 per BOE, while realized oil pricing increased 38%. Natural gas pricing remained pressured by ongoing Permian takeaway and processing constraints, with our average natural gas differential to NYMEX at negative $8.14 per Mcf. However, we have begun to see modest improvements following the startup of the Gulf Coast connector expansion, and we expect additional relief as incremental takeaway and processing capacity comes online later this year. While we do not expect gas realizations to normalize overnight, the trajectory is moving in the right direction and should provide a more constructive pricing environment going forward. Revenue for the quarter totaled approximately $104.7 million, supported by average realized oil prices of approximately $95.45 per barrel. As Paul noted earlier, while crude oil prices strengthened significantly during the quarter, our hedge portfolio limited participation in a portion of that upside. Those hedges were established to protect cash flow and support balance sheet improvement, and preserve financial flexibility during a period of commodity price uncertainty. As highlighted on slide 21 of our investor presentation, our focus on cost discipline continued to drive strong operating performance during the quarter. Second quarter LOE was $18.4 million compared to $18.1 million in the first quarter of 2026. On a per unit basis, LOE improved 3% sequentially to $10.12 per BOE from $10.41 per BOE, while all-in cash costs declined 1% quarter-over-quarter to $21.59 per BOE. Cash G&A, which excludes share-based compensation and transaction-related costs, was $3.19 per BOE for the second quarter, compared to $3.40 per BOE in the first quarter of 2026, representing a 6% sequential improvement. The quarter also represented an important milestone in strengthening the balance sheet. We completed an underwritten public equity offering that generated approximately $65 million of net proceeds, which were used entirely to reduce revolver borrowings. As a result, liquidity increased to approximately $226 million. Outstanding borrowings declined to approximately $360 million, and leverage improved to approximately 1.7x on a last quarter annualized basis. We remain fully compliant with all financial covenants and continue to target long-term leverage of less than 1.25x. The progress we have made strengthening the balance sheet is what allows us to be more proactive in allocating capital across the business while remaining disciplined financially. As shown on slide 14 of our investor presentation, our capital allocation framework remains straightforward: maintain a strong balance sheet, invest in high-return opportunities, preserve optionality through commodity cycles. That framework guided our decisions during the quarter and remains central to how we are positioning the business for 2027 and beyond. Consistent with that approach, we increased second quarter capital expenditures to approximately $43.2 million to support the continued evolution of our development program toward co-development pads with longer laterals that will result in a more capital-efficient operating model. This decision reflects our confidence in the quality of our inventory and the improving economics we see across our development program. As highlighted on slide 17 of our investor presentation, these infrastructure investments are expected to lower future development costs, improve well-level returns, and enhance capital efficiency across future drilling programs. Based on our initial 2027 outlook shown on slide 19, which contemplates drilling approximately 20 to 30 new horizontal wells, we estimate these initiatives could reduce future drilling and completion costs by at least $7.5 million. This estimate assumes savings of approximately $50 to $100 per lateral foot. Moving to our hedge position, for the remainder of 2026, we currently have approximately 1.7 million barrels of oil hedged, or approximately 70% of our estimated oil sales based on the midpoint of updated guidance. Importantly, as illustrated on slide 20 of our investor presentation, approximately 30% of our expected oil production remains unhedged, and a significant portion of our hedged volumes are structured as collars with attractive call ceilings, allowing us to participate in higher commodity prices while continuing to protect cash flow and support our development program. We also have 2.4 Bcf of natural gas hedged, or approximately 62% of our estimated natural gas sales based on the midpoint. For a quarterly breakout of our 2026 hedge positions, please see our earnings release and presentation, which includes the average price for each contract type. From my perspective, the most important financial takeaway is this: Ring is operating from a position of strength today, and we believe that position continues to get stronger. Over the last several quarters, we have materially improved our balance sheet, increased liquidity, and enhanced financial flexibility. At the same time, we continue to identify opportunities to improve the business and reduce costs. As highlighted on slide 16 of our investor presentation, the initiatives already implemented across our operations have reduced cash costs by approximately $1.50 per BOE, or roughly $10 million on an annualized basis. Importantly, we believe additional opportunities remain as we continue transitioning to more co-developed pads, longer laterals, and a more capital-efficient operating model. We believe the combination of a stronger balance sheet, improving capital efficiency, and a growing inventory of high-return opportunities positions Ring to deliver attractive returns and create long-term value in 2027 and beyond. With that, I'll turn it back to Paul. Paul McKinney: Thanks, Sonu. As we discussed throughout today's call, Ring remains focused on creating long-term shareholder value through disciplined capital allocation, operational execution, and financial discipline. We made significant progress strengthening our balance sheet this quarter. We also enhanced our hedging program, exposing future production to potentially higher commodity prices. Our drilling results continue to encourage our pursuit of transitioning to longer lateral horizontal wells and the co-development of our stacked multi-zone areas. The updated 2026 guidance and the initial 2027 outlook we provided today reflect the confidence we have in our asset base, operational momentum, and ability to continue improving capital efficiency and free cash flow generation. We believe Ring is stronger in every regard and better positioned today than it was at the beginning of the year. We remain committed to executing our strategy, strengthening the balance sheet, and creating long-term value for stockholders. With that, operator, we will open the call for questions. Operator: We will now begin the question and answer session. [Operator Instructions] At this time we will pause momentarily to assemble our roster. Our first question today comes from Jeff Robertson of Water Tower Research. Jeffrey Robertson: Paul, in the past you've talked about Ring's organic growth potential. With the initial plan you're laying out for 2027, it looks like you're capitalizing on a lot of the work that the teams have done over the last couple of years as highlighting that potential. Can you just talk about where you stand with respect to evaluating the asset base and identifying incremental drilling opportunities maybe versus where you were at the beginning of 2026? Paul McKinney: Sure. Jeff, thanks. That's a good question. As you know, we have spent quite a bit of time over the last several years. So here we are, we're going into year 4, and we believe by the end of this year, we will have also grown organically. So what do I mean by that? Having our geoscience and engineering teams and our land teams working together evaluating the lands that we operate, looking for untapped or undeveloped opportunities on those, just from an organic standpoint. And then going out and leasing additional lands that extend those areas, because we know we have the confidence in the economics and the returns and all that. We're also in the process of testing new zones. We talked about that a little earlier, because in these stacked pay areas, we're not alone out here. And a lot of the things that we are doing today were pioneered by others. So multiple bench development in the Midland and Delaware basins is very similar to the stacked pays that we have in the Central Basin Platform. However, these stacked pays that we are pursuing are conventional in nature, so they're conventional rocks, so they have higher porosities and permeabilities. And in some of these areas where the porosities and permeabilities were not as economic due to older technologies, today with the application of horizontal drilling, and especially longer lateral horizontal drilling, you can develop these resources. And then go into co-development where you're completing all of these stacked pays all in the same operational initiative, significantly reducing the cost. And so the real savings in being able to do that is investing in the infrastructure like we have. And so getting back to your original question, we believe we see opportunities up and down the Central Basin Platform in all of the areas that we currently operate. We are continuing to evaluate extensions from those areas, and we're leasing. And we're looking for more opportunities. We believe by the end of the year our portfolio will be significantly higher in terms of the inventory for us to prove. So over the last couple of years, as you know, earlier on we had a good medium-term development program of 5 to 10 years, and we've now gotten to the point where our inventory is over 10 years. We believe by the end of this year, in 2027, with the efforts of our Geoscience teams and Land teams, we believe that we'll significantly exceed that as well. Does that answer your question? Jeffrey Robertson: Yes, it does. Paul, I believe you started 2026 with a capital plan that was pinned on a $60 oil price deck or in the low $60s. Can you share what you're pinning the 2027 plan on? Paul McKinney: Sure. Yes, so the '27 plan, as we have -- as we're putting together currently, will be a higher capital spending plan than we started at the beginning of this year. So let's go back to the beginning of the year. We had a modest capital program, and we were anticipating a price environment that was going to test even $50 oil. And so we spent a lot of time strengthening our floors, so layering in hedges to strengthen the floor so we could guarantee we'd have at least $60 at the wellhead, because we believed we needed that to fund the development program to finish testing all these ideas that you and I just discussed about the stacked pay intervals up and down the Central Basin Platform. And so by looking at 2027, okay, let's go back up. When oil prices increased after the war with Iran initiated, and then also the equity raise, that positioned this company to strengthen the balance sheet strongly, and then take advantage of the higher prices to start making these investments a little bit earlier in the infrastructure necessary to have the higher capital efficiency of these longer laterals and co-developed locations. And so we're really excited about that. But the capital spending levels next year are going to be pretty much in line with what we've done in the past. Typically, this company has had a $150 million plus or minus type annual capital budget. Next year we're planning to spend a little bit more than that, $158 million to $160 million. But we believe that because of the added capital efficiency, we will end up delivering more barrels a day of production and more barrels of reserves per dollar spent as a result of the investments we're making this year. And it's going to make for significant production growth. It's basically organic production growth that we have not delivered in the 5 years or 6 years that I've been here. So we are positioning the company for accelerated production growth, which means, depending on prices, accelerated EBITDA growth. And this also is setting the stage for even potentially a stronger 2028. Sundip Johl: Yes, Jeff, and I can just add a little more color to that just to give you a little more definitive answer. We're running $75 in the near term for this next quarter, and then we've stress-tested our development program going into '27, and even taking it down to a $60 oil price in '27, the economics still work and we're able to marginally generate free cash flow. Operator: The next question comes from Poe Fratt of Alliance Global Partners. Charles Fratt: Congrats on the offering. There clearly was an impact on your CapEx. Can you potentially talk about whether there's going to be less limits on your -- on how much you hedge going forward? You've in the past highlighted that the bank revolver has sort of limited your ability to capture higher prices. Going forward, are you going to be in a better position to capture the upside if commodity prices are higher? Paul McKinney: Yes, that's a complex question. I think we should probably just go back and start it, just kind of lay the framework to address what does our credit facility require. So our credit facility requires that we hedge 50% of our oil and natural gas production for the first 24 months, and during the time period where our leverage ratio is above 1.25x and the draw against our borrowing base is greater than 50%. And so you may have seen in our press release and also in what we just discussed that we are very specifically focused on getting our leverage ratio down below 1.25x, because then at that point, as long as our draw against the borrowing base is less than 50% of our borrowing base, then 50% of the longer-term hedges, so months 13 through 24, they fall by 50%. We believe that is a key. If you go back and analyze the hedges over the last 5 or 6 years, the majority of the losses associated with those hedges were associated with those longer-term hedges that we put out in place during months 13 through 24. And so to the degree that we can lessen that, we will. And so, and then what that does allow though, it allows you to move more towards an opportunistic hedging strategy, because we really do believe, strongly believe, that we like to hedge our capital program each year to make sure that we have a protected position that protects that capital program, because the capital program is what does deliver the EBITDA and also position the company for sustainable growth in the future. So if you look at our hedge position today, right now during the third quarter and fourth quarter of '26, we're hovering around 30% of our oil production exposed to higher prices. But when you move into the first half of '27 and the second half of '27, now we're talking about 60%, 61%, 63%, 64% of our anticipated and forward-looking production being exposed to higher prices. All of this is summarized on Page 20 in our investor deck, but it does demonstrate real meaningful upside to adjusted free cash flow for the company. Does that answer your question, Poe? Charles Fratt: It did. I guess the short answer, Paul, is that the offering helped, but it didn't get you to where the hedging programs can be less of a constraint. You're still going to have to grow production, capture higher prices, and then hopefully, you'll be at that point where the hedging program won't limit your upside as much as it has in the past. Paul McKinney: Yes, and so one of the points, Poe, that I think I should also throw in, if you look at what these prices are doing to our trailing 12-month EBITDA, which is a component of that leverage ratio calculation, we are rapidly dropping our leverage ratio. We anticipate being in a position to qualify for the hedging requirements in months 13 through 24 by as early as first quarter next year. Would you say that, Sonu? Sundip Johl: Yes, it's all price dependent with the volatility. Yes, but with this elevated program, does put us in a much better position with the banks in our leverage ratio. Operator: The next question comes from Noel Parks of Tuohy Brothers. Noel Parks: Hi, good morning. You're talking about your continued leasing program you're looking at doing for the horizontal plays, you're sort of saying, and looking at many areas of the Central Basin Platform. And I'm just curious, now that you have sort of like the runway for the horizontal play, and you have a shot at some potentially compelling economics there. When it comes to sort of the land operation, does sort of that simplify what you can pay in bonuses in a given area or does that sort of complicate the whole land equation as you look to develop horizontally? Paul McKinney: No, I mean, it doesn't complicate things. It's pretty much the same type of business. The real challenge is finding the opportunities in an area like the Central Basin Platform that is so mature and most of that acreage out there is held by others. There are areas in our opinion that have been overlooked, even in the historical development of the Central Basin Platform, because even though some of these identified pay zones that do retain and hold hydrocarbons, historically, the porosities and permeabilities were so low and the technology back then was what it was, nobody ever really leased the lands and pursued it. And so we do believe that the Central Basin Platform still has a tremendous amount of opportunity. If you go look at Page 10 in our investor deck, we've pointed this out in the past, you can see how more developed the Delaware and Midland Basins are from a standpoint of ownership of larger organization public companies and a lot fewer privates. Well, the Central Basin Platform and the southern part of the Northwest Shelf have a lot more opportunity. And even those lands and producing acreages that are owned by the larger companies in the Central Basin Platform are still not core to them. They've demonstrated a willingness to sell. So we believe there's more opportunity in the Central Basin Platform and the Southern Shelf to grow than what little Ring can probably pursue all on its own. And so I'm not going to say we have infinite growth capacity, but at this point we have not seen the end to our potential and we're very excited about that. We have allocated more money to land acquisitions this year. We are not pointing out where we're buying land because we just don't want to have increased competition. It is already an area of significant competition anyway. But we are making progress and I cannot wait to disclose the progress as we progress throughout the year. Noel Parks: Great, thanks. And I just wanted to take a minute to get your thoughts on crude oil macro and what your current theory of the case is as far as why we don't have more strength in, say, the 2027 strip and beyond, considering that the months tick by and it still doesn't look like there's really a definitive resolution to what's going on with Iran. Paul McKinney: Yes, so Noel, there's a lot about what goes on in those open markets and what influences future prices that I'm not qualified to even address, but I do have an opinion that, that forward strip does not reflect the fundamentals going on right now. So if you just look at the amount of production that was -- has been curtailed just through the Strait of Hormuz. Now we found alternative routes for oil to come out of there, that has helped. But if it wasn't for the Strategic Petroleum Reserve scattered around the world, not just the United States, but other people as well, we would have been in a lot worse shape than we currently are. So we also had the benefit of a lot of floating and onshore storage that, if you remember before the war, that was the justification for why we really thought that oil prices could go below $50. Well, now all of that storage has been consumed, and all of the storage worldwide. I mean, I think there was an article just yesterday by the Strategic Petroleum Reserve, earlier, maybe last week, about the perilous level that our current Strategic Petroleum Reserve is at, requiring infrastructure repair there and a few other things before it can be fully utilized. And so we're probably talking about, just from a standpoint of meeting demand, the Strategic Petroleum Reserve still has more to pump out based on the last order that our president gave. But that's going to be gone in probably a month. And hopefully, the Strait of Hormuz will be resolved by then. But the reason why I believe there's going to be additional pressure, because not only will the world decide to refill the Strategic Petroleum Reserves that we've depleted because that's just the rational thing to do. But we've now read that several countries around the world have now decided to either build a Strategic Petroleum Reserve for themselves as a result of this disruption, and others have said they're going to expand the one that they have. And so all of that is going to be in addition to the demand that we've seen. And if you go back and look at the emerging economies around the world, there are countries now with large populations that are now seeing explosive growth in their middle class. What happens? Those middle-class individuals that are going to want to have the same lifestyles that the rest of the world has enjoyed. I just don't see a reduction in the historical demand for oil that we've seen. And all I see are additional fundamentals that are saying that we're going to need more oil in several different ways. Now, of course, we are becoming more and more efficient. Our automobiles are using less gasoline or whatever, getting better fuel mileage. There's a switch to EVs. I don't think that the switch to EVs is going to have as big of an impact as many people have said. But I also see demands on the natural gas side to generate the energy that these data centers are going to require. So everywhere I look, I see the fundamentals point to higher demand. And for the last, in my opinion, since the last big oil price shock the world saw back in 2028 (sic) [ 2008 ], and then the other one after that in 2014, I mean, the world has not been investing. So we've been relying on a spare capacity of all of the world's supplies, and we haven't been investing at a rate necessary to replace the decline. And so there's going to be a point in time, and I believe this disruption we've seen with the Iran war may have accelerated the crossing of the world's ability to deliver oil versus the world's demand for oil. And we don't know that. That's something that is harder to discern and it comes out over months of data, but I believe we're approaching that and if something doesn't change soon. And so I've even mentioned in the past, at least with my guys and with others, a good $80, $85 strip price that's flat would incentivize the capital investments that the world needs to start making investments now, so that we never do cross lines where the demand actually exceeds our ability to deliver. But if we don't, I believe in the next year or two, we're going to see those lines cross of supply and demand. It takes years to build the supply. And so we'll see how things go. But you know, I'm a firm believer that as we go into '27, '28, you know, the likelihood of seeing $50 or $60 oil becomes less. I'm not saying that we won't see it because we have stranger things happen in commodity markets, but the basic fundamentals right now to me appear to be strong going into '27, '28. We want to make sure that we position Ring Energy so that we can deliver the organic growth to take advantage of what I believe will be a stronger market environment. Noel Parks: Great. Thanks a lot. There were a couple of points in there I hadn't had on my radar screen. We appreciate it. Thanks a lot. Paul McKinney: You're welcome. Operator: Our next question comes from Jeff Robertson of Water Tower Research. Jeffrey Robertson: Thank you, Paul. Just to come back to the asset base, with respect to the horizontal wells that you have in the second half plan for this year and next year. Is the lateral length being dictated by the shape of the, or the geometry of the leases, or are there other reservoir issues that are helping determine the optimal lateral lengths? Paul McKinney: Yes, in most of our areas, the lateral length will be dictated by the units and the land position. In the last two years, we have been focusing our land acquisition efforts to ensure that we can unitize and develop these longer laterals. And so that's been a trend that we've been saying we wanted to do a year, year and a half, almost two years back. That's the primary driver in that regard. Now in the south, where we have historically drilled the inexpensive verticals and applied multi-stage fracking to these verticals and then drilled them all out and bring them along. In those areas, there are still areas that will prevent us from drilling the longer laterals because of the way the units are developed and all that. That's a little bit of work that the land department needs to dive into, and there are solutions to that. Our goal, though, is to convert all of our units to the extent that we can, so that we can drill these longer laterals and take advantage of the increased capital efficiency. So when you can reduce your lateral cost by $50 to $100 a foot by pursuing this technology and drilling longer laterals, it's just a smart thing to do. Sundip Johl: Jeff, if I may, I'd like to add something to that, that Paul covered. On slide 19, we actually, you know, one of the big things we're doing now, why we updated the guidance and our new guidance actually shows that we're going to drill longer laterals. It's also the infrastructure dollars that we've been spending, right? Building the facilities, the frack pits, and then also getting enough disposal for these longer laterals obviously bring on more production and also water, and so we needed the infrastructure dollars to be able to drill the 1.5-mile and 2-mile wells in the south. So that's the other reason. Operator: The next question comes from Poe Fratt of Alliance Global Partners. Please go ahead. Charles Fratt: Paul, you asked -- you mentioned asset sales in your prepared comments. How much could you generate from asset sales? And any idea of the timing of those sales? Paul McKinney: Yes, that's a challenging question to answer. I don't think there is a right answer to that. Some of the ideas we have are in their infancy stages. In other words, we're looking at what other people are doing. Some people have approached us saying, hey, we really like this or that. And so those thoughts or those processes haven't moved very far at all along. So it's kind of hard for me to come up with a number. There are other initiatives that we're looking at that are probably a little bit farther along, but I think it's premature to talk about how much money we think we can raise. But if you just look at our history, so since I've been here with Ring, and I'm approaching six years now, we have continued to optimize our portfolio. We've made acquisitions in the past, and we found that in those acquisitions there were assets that did not fit our criteria, and so we were careful to spin them off for a whole bunch of reasons. We made the decision to exit our position in New Mexico and other assets. And so this is something that we routinely do. And the reason why we mention it again is because we want to remind our shareholders that this is still another avenue to help strengthen the balance sheet and put the assets that we don't value as much into the hands of people that value them more, who are willing to pay us the premiums for them. So we're going to continue to do that, and we'll probably never stop doing that, to be honest with you. But today and at this point right now, to give you a range, I think I'd be way out of line. I think my CFO might yank a knot in my tail if I were to come out here and say too much. Sorry to not answer your question, Poe. Charles Fratt: Appreciate it, Paul. That's all right. Operator: This concludes our question and answer session. I would like to turn the conference back over to Mr. Paul McKinney for any closing remarks. Paul McKinney: Thank you, Operator. And on behalf of the entire team and Board of Directors, I want to once again thank everyone for listening and participating in today's call. We are pleased to have posted solid operational and financial results for the second quarter of 2026, and our outlook for the remainder of the year remains solid. We will continue to keep everyone apprised of our progress and thank you again for your interest in Ring Energy. Have a great day. Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Ring Energy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Ring Energy wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Ring Energy (REI) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Ring Energy, Inc.? Here are five stocks we like better. Production and pricing improved: Second-quarter sales volumes rose 3% sequentially to 19,990 BOE per day, while revenue reached approximately $104.7 million as realized pricing increased 36% to $57.55 per BOE. Unit costs also declined, with LOE falling to $10.12 per BOE. Debt reduction strengthened liquidity: A $65 million equity offering was used to repay revolver borrowings, raising liquidity to about $226 million and reducing leverage to approximately 1.7 times. Ring continues to target leverage below 1.25 times and may use potential non-core asset-sale proceeds for further debt reduction. Growth investment expanded: Ring raised its second-half 2026 capital spending plan to $80 million–$100 million and expects 2027 BOE sales to grow about 10% at the midpoint, despite reducing 2027 capital spending to $135 million–$165 million. Longer laterals, stacked-zone development and infrastructure investments are expected to lower future drilling and completion costs. Ring Energy (NYSEAMERICAN:REI) reported higher second-quarter production, improved unit operating costs and stronger realized pricing, while outlining a larger capital program intended to support longer lateral wells, multi-zone development and infrastructure expansion. The company said total sales volumes averaged 19,990 barrels of oil equivalent per day during the second quarter of 2026, up 3% from 19,351 BOE per day in the first quarter. Oil sales averaged 12,683 barrels per day. → No Hangover: Revisiting Microsoft One Week After Earnings Revenue totaled approximately $104.7 million, supported by an average realized oil price of about $95.45 per barrel. Overall realized pricing rose 36% sequentially to $57.55 per BOE, while realized oil pricing increased 38%, according to Executive Vice President, Chief Financial Officer and Treasurer Sonu Johl. Lease operating expense totaled $18.4 million during the quarter, compared with $18.1 million in the first quarter. On a per-unit basis, LOE declined 3% sequentially to $10.12 per BOE from $10.41 per BOE. All-in cash costs fell 1% from the prior quarter to $21.59 per BOE. → MarketBeat Week in Review – 08/03 - 08/07 Cash general and administrative expense, excluding share-based compensation and transaction-related costs, was $3.19 per BOE, down from $3.40 per BOE in the first quarter. Johl said natural-gas prices remained pressured by Permian Basin takeaway and processing constraints, with Ring’s average natural-gas differential to NYMEX at negative $8.14 per Mcf. He said the company had seen modest improvement following the Gulf Coast Connector expansion startup and expects further relief as additional capacity becomes available later in the year. → Why the Landlord of the AI Boom Could Outlast the Chipmakers During the quarter, Ring completed an underwritten public equity offering that generated approximately $65 million of net proceeds. The company used all proceeds to reduce borrowings under its revolving credit facility. As a result, liquidity increased to about $226 million, while outstanding borrowings declined to roughly $360 million. Ring said its leverage ratio improved to approximately 1.7 times on a last-quarter annualized basis and that it remained compliant with its financial covenants. The company continues to target long-term leverage below 1.25 times. Chairman and Chief Executive Officer Paul McKinney said potential proceeds from dispositions of non-core assets, which Ring continues to evaluate, would also be directed toward debt reduction. He did not provide an expected value or timing for any potential asset sales during the question-and-answer session. Ring spent approximately $43.2 million on capital expenditures in the second quarter as it expanded investments supporting longer horizontal laterals and co-development of stacked pay zones. McKinney said the company is moving from a focus on proving its resource base toward optimizing well spacing, landing zones, completion designs and development sequencing. Operational activity during the quarter included seven wells drilled and four wells completed. In the Northwest Shelf, the company drilled and completed one 1.5-mile horizontal well and one 1-mile horizontal well. In the Central Basin Platform, it drilled and completed one 1.5-mile horizontal well each in Andrews County and Crane County, and drilled three additional 2-mile horizontal wells in Crane County that had not been completed at quarter-end. Ring was also drilling a saltwater disposal well in Crane County as of June 30. Management said investments in water infrastructure, centralized facilities and other development infrastructure are intended to reduce future drilling and completion costs and improve capital efficiency. Based on its initial 2027 outlook, which contemplates drilling about 20 to 30 horizontal wells, Ring estimates its initiatives could reduce future drilling and completion costs by at least $7.5 million. The estimate assumes savings of approximately $50 to $100 per lateral foot. For the second half of 2026, Ring expects oil sales volumes of 13,000 to 13,950 barrels per day, representing a midpoint increase of approximately 2% from its previous guidance. The company expects LOE of $10 to $10.60 per BOE for the period, a midpoint reduction of about 2%. Ring increased its planned second-half capital spending range to $80 million to $100 million, bringing expected full-year 2026 capital expenditures to $158 million to $178 million. Management said it expects to fund the expanded program primarily through operating cash flow while continuing to reduce leverage. 2027 oil sales guidance: 13,550 to 14,650 barrels per day. 2027 total BOE sales guidance: 21,500 to 23,500 BOE per day. Expected midpoint BOE sales growth: About 10% over estimated 2026 sales. 2027 LOE guidance: $9.80 to $10.60 per BOE. 2027 capital spending guidance: $135 million to $165 million. McKinney said the 2027 capital range represents an approximately 10% midpoint reduction from estimated 2026 spending while supporting production growth. During the call, Johl said the company was using $75 oil in the near term and had stress-tested its 2027 development program at $60 oil, where management expects it could still generate marginal free cash flow. Management said stronger oil prices during the second quarter were partly offset by the company’s hedge position. Johl said Ring has about 1.7 million barrels of oil hedged for the remainder of 2026, representing about 70% of estimated oil sales at the midpoint of updated guidance. Approximately 30% of expected oil production remains unhedged, while a significant portion of hedged volumes consists of collars that retain some exposure to higher commodity prices. Ring also has 2.4 billion cubic feet of natural gas hedged, or about 62% of estimated gas sales based on midpoint guidance. McKinney said reducing leverage below the company’s target could lessen longer-term hedge requirements under its credit agreement, though Johl noted that timing would depend on commodity prices and leverage levels. Ring Energy, Inc is an independent oil and natural gas exploration and production company focused on the development, acquisition and operation of upstream assets in the United States. Headquartered in Odessa, Texas, the company concentrates its activities on onshore hydrocarbon plays, where it seeks to optimize production through technical innovation, cost management and disciplined capital allocation. Ring Energy trades on the NYSE American under the ticker symbol REI. The company's core operations are centered in the Permian Basin, one of North America's most prolific oil-producing regions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Ring Energy Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Ring Energy (REI) came out with quarterly earnings of $0.1 per share, beating the Zacks Consensus Estimate of $0.04 per share. This compares to earnings of $0.1 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +150.00%. A quarter ago, it was expected that this independent oil and gas company would post earnings of $0.03 per share when it actually produced earnings of $0.04, delivering a surprise of +33.33%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Ring Energy, which belongs to the Zacks Oil and Gas - Exploration and Production - United States industry, posted revenues of $104.68 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.43%. This compares to year-ago revenues of $82.6 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Ring Energy shares have added about 44.8% since the beginning of the year versus the S&P 500's gain of 13%. While Ring Energy has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Ring Energy was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.03 on $78 million in revenues for the coming quarter and $0.15 on $335.8 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Oil and Gas - Exploration and Production - United States is currently in the bottom 13% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Cheniere Energy (LNG), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This natural gas company is expected to post quarterly earnings of $2.80 per share in its upcoming report, which represents a year-over-year change of -61.6%. The consensus EPS estimate for the quarter has been revised 0.9% lower over the last 30 days to the current level. Cheniere Energy's revenues are expected to be $5.03 billion, up 8.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ring Energy, Inc. (REI) : Free Stock Analysis Report Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributes the second quarter's performance to disciplined capital allocation, where an equity offering provided balance sheet capacity to accelerate development without sacrificing debt reduction goals. The company is transitioning its operational model from 'proving the resource' to optimizing development through longer lateral horizontal wells and co-development of stacked pay areas. Strategic investments in infrastructure, including frack water storage, centralized facilities, and saltwater disposal, are being prioritized to unlock value in conventional reservoirs similar to historical unconventional breakthroughs. Management maintains a bullish commodity outlook, arguing that global demand growth and structural supply constraints—exacerbated by the Iran conflict—will eventually require higher prices to incentivize necessary upstream investment. Second quarter realized pricing was impacted by a hedge position established earlier in the year when the forward market was significantly weaker, limiting participation in the oil price upside. Natural gas realizations remained pressured by Permian takeaway constraints, though management noted modest improvements following the Gulf Coast connector expansion. Initial 2027 guidance projects approximately 10% growth in BOE sales volumes over 2026 estimates, driven by the transition to more capital-efficient drilling programs. Capital spending for 2027 is initially guided to a range of $135 million to $165 million, representing a midpoint reduction of approximately 10% compared to 2026 as infrastructure investments begin to yield efficiencies. Management expects to achieve a leverage ratio goal of 1.25x, which would trigger a reduction in mandatory hedging requirements for months 13 through 24 of the production cycle. The 2027 development plan assumes drilling 20 to 30 new horizontal wells, with infrastructure initiatives estimated to reduce drilling and completion costs by $50 to $100 per lateral foot. Guidance assumes that while natural gas pricing remains volatile, incremental takeaway and processing capacity coming online later in 2026 will provide a more constructive pricing environment. The company completed an underwritten public equity offering generating approximately $65 million in net proceeds, used entirely to reduce revolver borrowings. Management is actively evaluating the disposition of select non-core assets to further accelerate debt reduction, though specific timing and proceeds remain uncertain. A significant portion of the 2026 hedge portfolio is structured as collars, which management states will allow for participation in higher prices while maintaining a protective floor. Geopolitical risks involving Iran and the Strait of Hormuz are cited as key drivers of current market volatility and energy security concerns. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects the inventory to significantly exceed 10 years by the end of 2027 through organic leasing and testing of new zones in stacked pay areas. The strategy involves applying horizontal drilling to conventional rocks with higher porosities that were previously considered less economic with older technologies. Current credit facility requires 50% hedging for 24 months while leverage is above 1.25x; management expects to qualify for reduced requirements as early as Q1 2027. Reducing these requirements will allow the company to move toward a more opportunistic hedging strategy and capture more upside from higher commodity prices. CEO Paul McKinney argues the forward strip underestimates demand, noting that Strategic Petroleum Reserves are at 'perilous' levels and cannot substitute for long-term upstream investment. Management believes a flat $80 to $85 strip price is necessary to incentivize the global capital investments required to prevent demand from exceeding supply. Lateral lengths are primarily dictated by lease geometry and unitization efforts, with a focus on converting units to allow for 1.5-mile and 2-mile wells. Increased capital spending in 2026 was specifically directed at facilities and disposal capacity needed to handle the higher production and water volumes from longer laterals.

This article first appeared on GuruFocus. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Ring Energy Inc (REI) reported a 3% sequential increase in total BOE sales volumes, averaging 19,990 BOE per day in Q2 2026. Realized oil prices surged 38% quarter-over-quarter, boosting overall realized price by 36% to $57.55 per BOE. The company completed a $65 million equity offering, using proceeds to reduce revolver borrowings and improve liquidity to $226 million. Leverage improved to approximately 1.7 times, with a clear path to achieving the 1.25 times target by early 2027. Ring Energy Inc (REI) raised its 2026 oil sales guidance midpoint by 2% and provided initial 2027 guidance with 10% BOE growth. The company expects 2027 capital spending to decrease by 10% from 2026, while infrastructure investments are projected to cut future drilling costs by at least $7.5 million. Operational efficiency improved, with LOE per BOE down 3% sequentially to $10.12, and cash costs reduced by $1.50 per BOE annually. The company is transitioning to longer laterals and codevelopment, which is expected to enhance capital efficiency and returns. Ring Energy Inc (REI) has a growing inventory of over 10 years, with plans to expand further through leasing and acquisitions. The company maintains a disciplined hedging strategy, with 30% of oil production unhedged to capture upside in higher price environments. Ring Energy Inc (REI)'s hedge portfolio limited participation in the significant oil price upside during Q2 2026. Natural gas pricing remains pressured due to ongoing takeaway and processing constraints, with a differential of -$8.14 per MCF. The company's 2026 capital spending plan was increased to $158-$178 million, up from initial guidance, due to accelerated infrastructure investments. The equity offering diluted existing shareholders, though proceeds were used for debt reduction. The company faces uncertainty in the commodity market, with management noting the forward strip implies a surplus that may not materialize. Asset sales are still in early stages, with no clear timeline or expected proceeds, limiting near-term balance sheet flexibility. The transition to longer laterals and codevelopment requires significant upfront infrastructure investments, which may pressure near-term free cash flow. The company's leverage ratio remains above its 1.25 times target, though improving, and hedging requirements are still elevated. Geopolitical risks, such as the Iran conflict and Strait of Hormuz disruptions, create volatility in oil prices and operational uncertainty. The 2027 production growth outlook is dependent on successful execution of the development plan and commodity prices, with stress tests at $60 oil showing only marginal free cash flow. Warning! GuruFocus has detected 4 Warning Signs with REI. Is REI fairly valued? Test your thesis with our free DCF calculator. Q: Can you talk about where you stand with respect to evaluating the asset base and identifying incremental drilling opportunities, maybe versus where you were at the beginning of 2026? A: Paul McKinney, Chairman and CEO: We have spent considerable time over the last several years evaluating our operated land for untapped opportunities and leasing additional acreage to extend those areas. We are testing new zones in our stacked pay areas, which are conventional in nature with higher porosity and permeabilities. The application of horizontal drilling, especially longer laterals, and codevelopment significantly reduces costs. We believe we see opportunities up and down the Central Basin Platform, and by the end of the year, our inventory will be significantly higher, exceeding 10 years. With continued efforts from our geoscience and land teams, we believe this will significantly exceed that in 2027. Q: You started 2026 with a capital plan pinned on a $60 or low $60s price deck. Can you share what you're pinning the 2027 plan on? A: Paul McKinney, Chairman and CEO: The 2027 plan will be a higher capital spending plan. At the beginning of the year, we had a modest program anticipating a price environment that could test $50 oil. We layered in hedges to strengthen our floor to guarantee at least $60 at the wellhead. With higher oil prices and the equity raise, we are making infrastructure investments earlier to improve capital efficiency. Next year, we plan to spend around $160 million, which will deliver more barrels per day and more reserves per dollar spent, positioning the company for accelerated organic production growth we have not delivered in the 5-6 years I've been here. We are running $75 in the near term, and even at $60 oil in 2027, the economics still work and we can marginally generate free cash flow. Q: The equity offering clearly impacted your CapEx. Are you going to be in a better position to capture the upside if commodity prices are higher, given the revolver has historically limited your ability to capture higher prices? A: Paul McKinney, Chairman and CEO: Our credit facility requires hedging 50% of oil and gas production for the first 24 months when leverage is above 1.25 times and the draw against the borrowing base is greater than 50%. We are focused on getting leverage below 1.25 times, which would reduce longer-term hedging requirements by 50%. The majority of historical hedge losses were associated with months 13-24. We are rapidly dropping our leverage ratio and anticipate qualifying for reduced hedging requirements as early as the first quarter of next year. Currently, 30% of our oil production is exposed to higher prices in Q3-Q4 2026, but that increases to 60-64% in 2027, demonstrating meaningful upside to adjusted free cash flow. Q: Now that you have a runway for the horizontal play, does that simplify what you can pay in bonuses in a given area, or does it complicate the land equation? A: Paul McKinney, Chairman and CEO: It doesn't complicate things; it's the same type of business. The real challenge is finding opportunities in the mature Central Basin Platform where most acreage is held by others. There are overlooked areas because historical porosity and permeabilities were low and technology wasn't advanced. We believe the Central Basin Platform still has tremendous opportunity. Lands owned by larger companies are not core to them, and they've shown willingness to sell. We have allocated more money to land acquisitions this year, but we are not disclosing where we're buying to avoid increased competition. We are making progress and look forward to disclosing it as the year progresses. Q: Can you get your thoughts on crude oil macro and why we don't have more strength in the 2027 strip and beyond, considering the unresolved situation with Iran? A: Paul McKinney, Chairman and CEO: The forward strip does not reflect current fundamentals. Production curtailed through the Strait of Hormuz has been offset by alternative routes and strategic petroleum reserves, but those reserves are being depleted. Global storage has been consumed. Emerging economies with growing middle classes will drive continued demand. The world has not been investing at a rate necessary to replace decline since the last major price shocks. I believe this disruption may have accelerated the crossing of the world's ability to deliver oil versus demand. A flat $80-$85 strip would incentivize the capital investments needed. As we go into 2027 and 2028, the likelihood of seeing $50 or $60 oil becomes less. We want to position Ring Energy to deliver organic growth to take advantage of what I believe will be a stronger market environment. Q: With respect to the horizontal wells in the second half plan and next year, is the lateral length being dictated by the shape of the leases or other reservoir issues? A: Paul McKinney, Chairman and CEO: In most areas, lateral length is dictated by the unit and land position. Over the last two years, we have focused land acquisition efforts to ensure we can unitize and develop longer laterals. In the South, where we historically drilled verticals, there are still areas that prevent longer laterals due to unit development, but our land department is working on solutions. Our goal is to convert all units to drill long laterals and take advantage of increased capital efficiency. Alex Dyers, EVP and Chief Operations Officer, added that the infrastructure dollars spent on facilities, frac pits, and disposal wells are necessary to support the 1.5 and 2-mile wells in the South, which bring on more production and water. Q: You mentioned asset sales in your prepared comments. How much could you generate from asset sales and what is the timing? A: Paul McKinney, Chairman and CEO: That's a challenging question to answer. Some ideas are in their infancy, while others are a bit further along, but it's premature to discuss amounts. Looking at our history, we have routinely optimized our portfolio, making acquisitions and exiting positions that don't fit our criteria, such as our exit from New Mexico. This is another avenue to strengthen the balance sheet and put assets we value less into the hands of those who value them more. We will continue to do this, but giving a range today would be out of line. Q: Can you talk about the impact of the equity offering on your ability to reduce hedging constraints and capture higher prices? A: Paul McKinney, Chairman and CEO: The offering helped strengthen the balance sheet, but we still need to grow production and capture higher prices to reach the point where hedging programs won't limit upside as much. The elevated price environment is rapidly dropping our leverage ratio, and we anticipate For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Strengthened Balance Sheet, Operational Progress and Encouraging Well Results Support Ring’s Transition to Its Next Phase of Value Creation THE WOODLANDS, Texas, Aug. 05, 2026 (GLOBE NEWSWIRE) -- Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”) today reported operational and financial results for the second quarter of 2026, announced an expanded development program for second half of 2026, updated guidance for the remainder of 2026 and provided guidance for 2027. Second Quarter 2026 Highlights Strengthened Financial Position Reported net income of $64.8 million (included a $42.2 million unrealized mark-to-market gain on commodity derivative contracts), or $0.27 per diluted share, and Adjusted Net Income1 of $24.0 million, or $0.10 per diluted share; Reduced borrowings under the Company’s revolving credit facility by $66 million during the quarter and increased liquidity to approximately $226.1 million at June 30, 2026; Increased Adjusted EBITDA1 42% to $54.5 million from $38.3 million in the first quarter; year-to-date Adjusted EBITDA totaled $92.8 million; and Generated net cash provided by operating activities of $40.8 million and remained cash flow positive for over 6 consecutive years. Continued Operational and All-In Cash Cost1 Improvements Produced 12,683 barrels of oil per day and 19,990 barrels of oil equivalent (“Boe”) per day, both within guidance; Reported lease operating expense of $10.12 per Boe, near the low end of guidance and below first quarter levels; and Reduced Company all-in-cash costs by 5% in first half 2026 to $21.68 per Boe as compared to first half 2025. Advanced Development and Infrastructure Initiatives Invested approximately $43.2 million in capital expenditures during the quarter, including three ~2-mile horizontal wells drilled, one saltwater disposal well (“SWD”), a frac pond, and other infrastructure projects; and Continued execution of multiple technical and operational initiatives aimed at improving capital efficiency, expanding development opportunities and enhancing long-term stockholder value. Positioned for Improved Returns and Sustainable Growth Second half 2026 oil production guidance range of 13,000 to 13,950 Bopd, with the midpoint approximately 2% above prior guidance. Second half 2026 LOE per Boe guidance range of $10.00 to $10.60, with the midpoint approximately 2% below prior guidance. Initial 2027 guidance targets: Management Commentary Mr. Paul D. McKinney, Chairman of the Board and Chief Executive Officer, commented, “The second quarter marked another period of efficient and effective execution for Ring Energy. We delivered production within guidance, reduced per-Boe operating costs, significantly increased Adjusted EBITDA, and generated positive Adjusted Free Cash Flow1 for the 27th straight quarter. Additionally, we continued strengthening our balance sheet while positioning the Company for the next phase of its development strategy. The equity offering completed during the quarter gave us the balance sheet capacity to fund the acceleration of our development transition without losing focus on decreasing our leverage ratio. Rather than choosing between strengthening the balance sheet and investing in the highest-return phase of our development plan, the timing of this raise allowed us to do both. We expect our expanded drilling program to be funded primarily through operating cash flow going forward, with leverage continuing to trend toward our 1.25x target as this investment cycle completes. When considering these results and the expansion of our undeveloped drilling inventory due to our 2026 capital program, the Company is meaningfully stronger in almost every regard than it was at the beginning of the year." Mr. McKinney concluded, “Over the past eighteen months, we have strengthened our balance sheet, improved liquidity and advanced a number of initiatives designed to enhance long-term value of our asset base. Looking ahead and supported by improving commodity prices, greater exposure to those prices through an improved hedge position and encouraging early drilling results, we are increasing our capital investment program for the remainder of 2026 that will allow for our transition to a more capital efficient development program of longer lateral wells and co-horizontal-development of our stacked-pay drilling opportunities. We strongly believe this transition will enhance economic returns, improve capital efficiency and increase the long-term value of our inventory. As a result, we expect increased production, reserves and free cash flow generation over time. We expect to fund this expanded program primarily through operating cash flow while maintaining Ring's commitment to financial discipline, free cash flow generation, balance sheet strength and per share return metrics. Also, as a part of our ongoing portfolio management, we continue to evaluate select non-core assets that do not fit our long-term development plans and any proceeds from such divestitures would be directed toward further debt reduction, consistent with our capital allocation priorities.”___________________________________1 A non-GAAP financial measure; see the “Non-GAAP Financial Information” section in this release for more information including reconciliations to the most comparable GAAP measures. Summary Results and Additional Key Items (1) Adjusted Net Income, Adjusted EBITDA, and Adjusted Free Cash Flow are non-GAAP financial measures, which are described in more detail and reconciled to the most comparable GAAP measures, in the tables shown later in this release under “Non-GAAP Financial Information.” In addition, see section titled “Condensed Operating Data” for additional details concerning costs and expenses presented below.(2) Not meaningful. Select Expenses and Other Items (1) A summary listing of the Company’s outstanding derivative positions as of August 4, 2026 is included in the tables shown later in this release. As of August 4, 2026, for the remainder (July through December) of 2026, the Company has approximately 1.7 million barrels of oil (approximately 70% of oil sales guidance midpoint) hedged at an average upside protection price of $71.47 and approximately 2.4 billion cubic feet of natural gas (approximately 62% of natural gas sales guidance midpoint) hedged at an average downside protection price of $3.78.(2) Not meaningful. Balance Sheet and Liquidity Total liquidity (defined as cash and cash equivalents plus borrowing base availability under the Company’s credit facility) at June 30, 2026 was approximately $226.1 million, consisting of $225.0 million of availability under our revolving credit facility, which included a reduction of $35 thousand for letters of credit, and $1.1 million in cash and cash equivalents. On June 30, 2026, the Company had $360 million in borrowings outstanding on its credit facility that has a current borrowing base of $585 million. This reflects a reduction of $66 million from the balance of $426 million at March 31, 2026. The Company intends to resume debt reduction, dependent on market conditions, the timing and level of capital spending, and other considerations. Drilling and Completion Activity In 2Q 2026 the Company continued execution of its development program across its core positions. In the Northwest Shelf the Company drilled and completed one 1.5-mile horizontal (98% working interest) and one 1-mile horizontal well (100% working interest) in Yoakum County. In the Central Basin Platform, the Company drilled and completed one 1.5-mile horizontal well (99% working interest) in Andrews County, and one 1.5-mile horizontal well (96% working interest) in Crane County. The latter of these two wells, while completed, was not put on pump until 3Q 2026 and did not contribute significant volumes in 2Q 2026. Also in Crane County, the Company drilled three 2-mile horizontal wells (each with working interest of 100%) and was in the process of drilling one SWD well. The three 2-mile horizontal wells represent the first laterals of this length drilled by the Company in an area that has been historically developed with vertical wells. All four of these wells are expected to be completed during the third quarter of 2026. The table below sets forth Ring’s drilling and completion activities in the first half of 2026: (1) The horizontal well completed in the Central Basin Platform in the first quarter of 2026 is the completion of a previously drilled but uncompleted (“DUC”) well. Remaining Quarters of 2026 and Full-Year 2027 Sales Volumes, Capital Investment and Operating Expense Guidance Since providing its original 2026 development outlook, Ring has continued to refine its development plan towards horizontal drilling and allocate capital toward its highest-return opportunities. Under the revised plan, wells exceeding 1.5 miles in length are expected to represent approximately 70% of planned 2026 drilling activity, compared to approximately 42% contemplated in the original plan. This evolution reflects encouraging early well results, improved operational execution and the attractive economics associated with extended-reach laterals. Ring believes the increased concentration of longer lateral opportunities has the potential to enhance capital efficiency, improve project economics and support the Company's strategy of generating higher returns while responsibly growing production. Based on the spending guidance, the Company expects the following estimated allocation of capital: Approximately 57% for new drilling, completions, and related facilities; 23% for capital workovers, recompletions, and stimulation activities; 14% for infrastructure projects; and 6% for land, non-operated capital, compliance and other. The guidance in the table below represents the Company's current good faith estimate of the range of likely future results. Guidance could be affected by the factors discussed below in the "Safe Harbor Statement" section. (1) In addition to Company-directed drilling and completion activities, the capital spending outlook includes funds for targeted well recompletions, capital workovers, infrastructure upgrades, and well reactivations. Also included is anticipated spending for leasing acreage; and non-operated drilling, completion, capital workovers, and facility improvements. Conference Call Information Ring will hold a conference call on Thursday, August 6, 2026 at 11:00 a.m. ET (10 a.m. CT) to discuss its 2Q 2026 operational and financial results. An updated investor presentation will be posted to the Company’s website prior to the conference call. To participate in the conference call, interested parties should dial 833-953-2433 at least five minutes before the call is set to begin. Please reference the “Ring Energy 2Q 2026 Earnings Conference Call”. International callers may participate by dialing 412-317-5762. The call will also be webcast and available on Ring’s website at www.ringenergy.com under “Investors” on the “News & Events” page. An audio replay will also be available on the Company’s website following the call. About Ring Energy, Inc. Ring Energy, Inc. is an oil and gas exploration, development, and production company with current operations focused on the development of its Permian Basin assets. For additional information, please visit www.ringenergy.com. Safe Harbor Statement This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements involve a wide variety of risks and uncertainties, and include, without limitation, statements with respect to the Company’s strategy and prospects. The forward-looking statements include statements about the expected future reserves, production, financial position, business strategy, revenues, earnings, costs, capital expenditures and debt levels of the Company, and plans and objectives of management for future operations. Forward-looking statements also include assumptions and projections for remaining quarters of 2026 guidance for sales volumes, oil, NGL and natural gas mix as a percentage of total sales, capital expenditures, operating expenses and the projected impacts thereon. Forward-looking statements are based on current expectations and assumptions and analyses made by Ring and its management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors appropriate under the circumstances. However, whether actual results and developments will conform to expectations is subject to a number of material risks and uncertainties, including but not limited to: declines in oil, natural gas liquids or natural gas prices; the level of success in exploration, development and production activities; the impact of worldwide political, military and armed conflict (including the impact of the ongoing conflict with Iran and the closure of the Strait of Hormuz); adverse weather conditions that may negatively impact development or production activities particularly in the winter; the timing of exploration and development expenditures; inaccuracies of reserve estimates or assumptions underlying them; revisions to reserve estimates as a result of changes in commodity prices; impacts to financial statements as a result of impairment write-downs; risks related to level of indebtedness and periodic redeterminations of the borrowing base and interest rates under the Company’s credit facility; Ring’s ability to generate sufficient cash flows from operations to meet the internally funded portion of its capital expenditures budget; the impacts of hedging on results of operations; changes in U.S. energy, environmental, monetary, tax and trade policies, including with respect to tariffs or other trade barriers, and any resulting trade tensions; cost and availability of transportation and storage capacity as a result of oversupply, government regulation or other factors; and Ring’s ability to replace oil and natural gas reserves. Such statements are subject to certain risks and uncertainties which are disclosed in the Company’s reports filed with the Securities and Exchange Commission (“SEC”), including its Form 10-K for the fiscal year ended December 31, 2025, and its other SEC filings. Ring undertakes no obligation to revise or update publicly any forward-looking statements, except as required by law. Contact Information Sonu Singh JohlExecutive Vice President, Chief Financial Officer and TreasurerPhone: 281-397-3699 Email: [email protected] (1) Boe is determined using the ratio of six Mcf of natural gas to one Bbl of oil (totals may not compute due to rounding). The conversion ratio does not assume price equivalency and the price on an equivalent basis for oil, natural gas, and natural gas liquids may differ significantly. (1) The gas basis swap hedges are calculated as the Henry Hub natural gas price less the fixed amount specified as the weighted average spread price above. RING ENERGY, INC.Non-GAAP Financial Information Certain financial information included in this release are not measures of financial performance recognized by accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures are “Adjusted Net Income,” “Adjusted EBITDA,” “Adjusted Free Cash Flow” or “AFCF,” “Adjusted Cash Flow from Operations”or “ACFFO,” “G&A Excluding Share-Based Compensation,” “G&A Excluding Share-Based Compensation and Transaction Costs,” “Leverage Ratio,” “Consolidated Total Debt to LQA Consolidated EBITDAX,” “All-In Cash Operating Costs,” and “Cash Operating Margin.” Management uses these non-GAAP financial measures in its analysis of performance. These disclosures may not be viewed as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP performance measures which may be reported by other companies. Reconciliation of Net income (loss) to Adjusted Net Income “Adjusted Net Income” is calculated as net income (loss) minus the estimated after-tax impact of share-based compensation, ceiling test impairment, unrealized gains and losses on changes in the fair value of derivatives, and transaction costs for acquisitions and divestitures (“A&D”). Adjusted Net Income is presented because the timing and amount of these items cannot be reasonably estimated and affect the comparability of operating results from period to period, and current period to prior periods. The Company believes that the presentation of Adjusted Net Income provides useful information to investors as it is one of the metrics management uses to assess the Company’s ongoing operating and financial performance, and also is a useful metric for investors to compare the Company’s results with its peers. Reconciliation of Net income (loss) to Adjusted EBITDA The Company defines “Adjusted EBITDA” as net income (loss) plus net interest expense (including interest income and expense), unrealized loss (gain) on change in fair value of derivatives, ceiling test impairment, income tax (benefit) expense, depreciation, depletion and amortization, asset retirement obligation accretion, transaction costs for acquisitions and divestitures (A&D), share-based compensation, loss (gain) on disposal of assets, and backing out the effect of other income. Company management believes Adjusted EBITDA is relevant and useful because it helps investors understand Ring’s operating performance and makes it easier to compare its results with those of other companies that have different financing, capital and tax structures. Adjusted EBITDA should not be considered in isolation from or as a substitute for net income, as an indication of operating performance or cash flows from operating activities or as a measure of liquidity. Adjusted EBITDA, as Ring calculates it, may not be comparable to Adjusted EBITDA measures reported by other companies. In addition, Adjusted EBITDA does not represent funds available for discretionary use. Reconciliations of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow and Adjusted EBITDA to Adjusted Free Cash Flow The Company defines “Adjusted Free Cash Flow” or “AFCF” as Net Cash Provided by Operating Activities (as reflected on the Company’s Condensed Statements of Cash Flows) less changes in operating assets and liabilities, and plus transaction costs for acquisitions and divestitures (“A&D”), current income tax expense (benefit), proceeds from divestitures of equipment for oil and natural gas properties, loss (gain) on disposal of assets, and less capital expenditures, credit loss expense, and other income. For this purpose, the Company’s definition of capital expenditures includes costs incurred related to oil and natural gas properties (such as drilling and infrastructure costs and lease maintenance costs) but excludes acquisition costs of oil and gas properties from third parties that are not included in the Company’s capital expenditures guidance provided to investors. Management believes that Adjusted Free Cash Flow is an important financial performance measure for use in evaluating the performance and efficiency of the Company’s current operating activities after the impact of capital expenditures and net interest expense (including interest income and expense, excluding amortization of deferred financing costs) and without being impacted by items such as changes associated with working capital, which can vary substantially from one period to another. Other companies may use different definitions of Adjusted Free Cash Flow. Reconciliation of Net Cash Provided by Operating Activities to Adjusted Cash Flow from Operations The Company defines “Adjusted Cash Flow from Operations” or “ACFFO” as Net Cash Provided by Operating Activities, as reflected in the Company’s Condensed Statements of Cash Flows, less the changes in operating assets and liabilities, which includes accounts receivable, inventory, prepaid expenses and other assets, accounts payable, and settlement of asset retirement obligations, which are subject to variation due to the nature of the Company’s operations. Accordingly, the Company believes this financial performance measure is useful to investors because it is used often in its industry and allows investors to compare this metric to other companies in its peer group as well as the E&P sector. Reconciliation of General and Administrative Expense (G&A) to G&A Excluding Share-Based Compensation and Transaction Costs The following table presents a reconciliation of General and Administrative Expense (“G&A”), a GAAP measure, to G&A excluding share-based compensation, and G&A excluding share-based compensation and transaction costs for acquisitions and divestitures (A&D). Calculation of Leverage Ratio “Leverage” or the “Leverage Ratio” is calculated pursuant to the Company’s existing senior revolving credit facility and means as of any date, the ratio of (i) Consolidated Total Debt as of such date to (ii) Consolidated EBITDAX for the four consecutive fiscal quarters ending on or immediately prior to such date for which financial statements are required to have been delivered under the credit facility. The Company defines “Consolidated Total Debt” in accordance with its existing senior revolving credit facility and means, as of any date, all Indebtedness of the Company on a consolidated basis as of such date, but excluding hedging obligations. The Company defines “Indebtedness” in accordance with its existing senior revolving credit facility and generally means (i) all obligations of the Company for borrowed money, (ii) all obligations of the Company evidenced by notes or other similar instruments, (iii) all obligations of the Company in respect of the deferred purchase price of property or services, (iv) all obligations of the Company under any conditional sale relating to property acquired the Company, (v) all capital lease obligations of the Company, (vi) all obligations, contingent or otherwise, of the Company in respect of letters of credit or similar extensions of credit, (vii) all guarantees of the Company of the type of Indebtedness described in clauses (i) through (vi) above, (viii) all Indebtedness of a third party secured by any lien on property owned by the Company, whether or not such Indebtedness has been assumed by the Company, (ix) all off-balance sheet liabilities, (x) all hedging obligations and (xi) the undischarged balance of any production payment created by the Company or for the creation of which the Company directly or indirectly received payment. The Company defines “Consolidated EBITDAX” in accordance with its existing senior revolving credit facility and means for any period an amount equal to the sum of (i) consolidated net income (loss) for such period plus (ii) to the extent deducted in determining consolidated net income (loss) for such period, and without duplication, (A) consolidated interest expense, (B) income tax expense (benefit) determined on a consolidated basis, (C) depreciation, depletion and amortization determined on a consolidated basis, (D) exploration expenses determined on a consolidated basis, and (E) all other non-cash charges reasonably acceptable to the administrative agent, in each case for such period minus (iii) all noncash income added to consolidated net income (loss) for such period; provided that, for purposes of calculating compliance with the financial covenants under the credit facility, to the extent that during such period the Company has consummated an acquisition permitted by the credit facility or any sale, transfer or other disposition of any property or assets permitted by the credit facility, Consolidated EBITDAX will be calculated on a pro forma basis with respect to the property or assets acquired or disposed of. The maximum permitted Leverage Ratio under the senior revolving credit facility is 3.00. The following tables show the leverage ratio calculations for the quarters ended June 30, 2026 and June 30, 2025. Calculation of Consolidated Total Debt to LQA Consolidated EBITDAX The Company defines Consolidated Total Debt to LQA Consolidated EBITDAX as Consolidated Total Debt divided by LQA (“Last Quarter Annualized”) Consolidated EBITDAX. Consolidated Total Debt and Consolidated EBITDAX are defined pursuant to the Company’s existing senior revolving credit facility. The Company believes this metric is more reflective of its current leverage ratio profile by annualizing Consolidated EBITDAX for the most recent period. Consolidated Total Debt to LQA Consolidated EBITDAX and Consolidated EBTIDAX are non-GAAP financial measures and may not be comparable to similarly titled measures used by other companies and should not be considered as a substitute for measured prepared in accordance with GAAP. Therefore, the Company believes it is important to view this ratio and Consolidated EBITDAX as supplemental to its entire financial statements. All-In Cash Operating Costs The Company defines All-In Cash Operating Costs, a non-GAAP financial measure, as “all in cash” costs which includes lease operating expenses, G&A costs excluding share-based compensation, net interest expense (including interest income and expense, excluding amortization of deferred financing costs), workovers and other operating expenses, production taxes, ad valorem taxes, and gathering/transportation costs. Management believes that this metric provides useful additional information to investors to assess the Company’s operating costs in comparison to its peers, which may vary from company to company. Cash Operating Margin The Company defines Cash Operating Margin, a non-GAAP financial measure, as realized revenues per Boe less “all-in cash operating costs” per Boe. Management believes that this metric provides useful additional information to investors to assess the Company’s operating margins in comparison to its peers, which may vary from company to company.

Ring Energy (REI) is expected to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended June 2026. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 5. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. This independent oil and gas company is expected to post quarterly earnings of $0.04 per share in its upcoming report, which represents a year-over-year change of -60%. Revenues are expected to be $102.2 million, up 23.7% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 66.67% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Ring Energy, the Most Accurate Estimate is the same as the Zacks Consensus Estimate, suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate. This has resulted in an Earnings ESP of 0%. On the other hand, the stock currently carries a Zacks Rank of #4. So, this combination makes it difficult to conclusively predict that Ring Energy will beat the consensus EPS estimate. Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Ring Energy would post earnings of $0.03 per share when it actually produced earnings of $0.04, delivering a surprise of +33.33%. Over the last four quarters, the company has beaten consensus EPS estimates four times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Ring Energy doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ring Energy, Inc. (REI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Comstock Resources (CRK) came out with quarterly earnings of $0.03 per share, beating the Zacks Consensus Estimate of $0.02 per share. This compares to earnings of $0.13 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +50.00%. A quarter ago, it was expected that this oil and gas company would post earnings of $0.23 per share when it actually produced earnings of $0.15, delivering a surprise of -34.78%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Comstock, which belongs to the Zacks Oil and Gas - Exploration and Production - United States industry, posted revenues of $353.28 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 14.9%. This compares to year-ago revenues of $470.26 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Comstock shares have lost about 46.6% since the beginning of the year versus the S&P 500's gain of 8.5%. While Comstock has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Comstock was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.10 on $484.59 million in revenues for the coming quarter and $0.50 on $2.05 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Oil and Gas - Exploration and Production - United States is currently in the bottom 13% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Ring Energy (REI), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This independent oil and gas company is expected to post quarterly earnings of $0.04 per share in its upcoming report, which represents a year-over-year change of -60%. The consensus EPS estimate for the quarter has been revised 66.7% lower over the last 30 days to the current level. Ring Energy's revenues are expected to be $102.2 million, up 23.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Comstock Resources, Inc. (CRK) : Free Stock Analysis Report Ring Energy, Inc. (REI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The Zacks Oil and Gas - Exploration and Production - United States industry remains closely tied to commodity prices, and firm crude prices are giving domestic producers a useful cash-flow lift. Higher oil realizations can support drilling, debt reduction and shareholder returns, especially as global supply concerns keep the value of reliable U.S. production in focus. Still, the picture is not without pressure. Rising service, labor, maintenance and decommissioning costs can limit upside, while weak natural gas prices may weigh on producers with meaningful gas exposure. Even so, the industry’s improving discipline is encouraging. Companies are focusing on better wells, controlled spending, workovers and free cash flow rather than growth at any cost. The group’s Zacks Industry Rank in the top 50% and rising 2026 earnings estimates point to a healthier near-term setup. Against this backdrop, APA Corporation APA, W&T Offshore WTI and Ring Energy REI stand out as attractive names to watch. About the Industry The Zacks Oil and Gas - US E&P industry consists of companies primarily based in the domestic market and focused on the exploration and production (E&P) of oil and natural gas. These firms find hydrocarbon reservoirs, drill oil and gas wells, and produce and sell these materials to be refined later into products such as gasoline, fuel oil, distillate, etc. The economics of oil and gas supply and demand are the fundamental drivers of this industry. In particular, a producer’s cash flow is primarily determined by the realized commodity prices. In fact, all E&P companies' results are vulnerable to historically volatile prices in the energy markets. A change in realizations affects their returns, causing them to alter their production growth rates. The E&P operators are also exposed to exploration risks where drilling results are comparatively uncertain. 4 Key Trends to Watch in the Oil and Gas - US E&P Industry Higher Oil Prices Can Quickly Lift Cash Flow: The U.S. exploration and production industry remains highly sensitive to oil prices. When crude prices rise, producers usually see a direct benefit because each barrel sold brings in more cash. That can improve margins, fund drilling, support debt reduction and leave more room for shareholder returns. Current geopolitical tensions also keep attention on energy security and a reliable domestic supply. This helps U.S. producers because local barrels become more valuable when global supply feels uncertain. For investors, the key attraction is simple: if oil stays firm, many producers can generate strong free cash flow without needing aggressive production growth. Rising Costs and Obligations Limit Upside: The industry still faces meaningful cost and liability pressures. Diesel, power, equipment, labor, maintenance, workovers and facility upgrades can become more expensive when activity improves or oil prices rise. Offshore operators also carry large decommissioning and asset-retirement obligations, which can absorb cash that might otherwise go to growth or shareholder returns. Some producers are still focused on reducing debt, so stronger cash flow may be directed toward balance-sheet repair instead of aggressive drilling. For investors, this creates a practical limit on upside. Higher commodity prices help, but they do not remove the need for spending discipline and careful liability management. Better Efficiency Supports Returns Through Cycles: A more disciplined operating model is becoming a strength for U.S. exploration and production companies. Many producers are focusing less on growth at any cost and more on lower spending, better well performance, workovers, recompletions and selective infrastructure upgrades. This can make each dollar of capital work harder. Low-decline assets are also useful because they require less spending just to keep production steady. For investors, this matters because the industry can create value even when commodity prices are choppy. Strong cost control, careful capital allocation and a focus on free cash flow can make earnings more durable over time. Weak Natural Gas Prices to Drag Results: Not every part of the commodity mix is supportive. In some U.S. basins, natural gas prices have been weak, and local pricing can sometimes fall far below benchmark levels. This can force producers to curtail gas volumes or accept poor realized prices. Even oil-focused companies can feel the pressure because many wells produce associated gas along with crude. Lower gas and NGL values can reduce total revenue per barrel of oil equivalent and hurt reported production economics. For investors, the risk is that strong oil prices may not fully offset weak gas markets, especially in areas with limited takeaway capacity. Zacks Industry Rank Indicates Positive Outlook The Zacks Oil and Gas - US E&P industry is a 34-stock group within the broader Zacks Oil - Energy sector. The industry currently carries a Zacks Industry Rank #104, which places it in the top 42% of 247 Zacks industries. The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates fairly strong near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1. The industry’s position in the top 50% of the Zacks-ranked industries is a result of improving earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are becoming optimistic about this group’s earnings growth potential. As a matter of fact, the industry’s earnings estimates for 2026 have gone up 34.6% in the past year. Considering the encouraging dynamics of the industry, we will present a few stocks that you may want to consider for your portfolio. But it’s worth taking a look at the industry’s shareholder returns and current valuation first. Industry Underperforms Sector and S&P 500 The Zacks Oil and Gas - US E&P industry has fared worse than the broader Zacks Oil - Energy Sector and the Zacks S&P 500 composite over the past year. The industry has moved down 1.2% over this period against the broader sector’s increase of 26.2%. Meanwhile, the S&P 500 has gained some 27%. One-Year Price Performance Industry's Current Valuation Since oil and gas companies are debt-laden, it makes sense to value them based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio. This is because the valuation metric takes into account not just equity but also the level of debt. For capital-intensive companies, EV/EBITDA is a better valuation metric because it is not influenced by changing capital structures and ignores the effect of noncash expenses. On the basis of the trailing 12-month enterprise value-to-EBITDA (EV/EBITDA), the industry is currently trading at 11.01X, lower than the S&P 500’s 18.62X. It is, however, well above the sector’s trailing 12-month EV/EBITDA of 6.57X. Over the past five years, the industry has traded as high as 17.10X and as low as 3.42X, with a median of 6.08X. Trailing 12-Month Enterprise Value-to EBITDA (EV/EBITDA) Ratio (Past Five Years) 3 Stocks to Focus On W&T Offshore: W&T Offshore is a Houston-based oil and gas company focused on the Gulf of America. Founded in 1983 by Tracy Krohn, it has been listed on the NYSE since 2005 under the ticker WTI. Over four decades, the Zacks Rank #2 (Buy) company has grown from a small independent operator into a seasoned offshore player, mainly through acquisitions and selective drilling. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The company operates across 48 offshore fields and holds a large acreage base in shallow and deepwater areas. Its strategy is simple: improve existing assets, control costs, add reserves, and pursue smart acquisitions. With strong technical experience, operating production, and a focus on cash flow, W&T Offshore aims to support steady long-term growth. The Zacks Consensus Estimate for the company’s 2026 earnings per share indicates 67.6% year-over-year growth. Over the past 60 days, the Zacks Consensus Estimate for W&T Offshore’s 2026 loss has narrowed from 32 cents per share to 12. Price and Consensus: WTI Ring Energy: Ring Energy is a Texas-based oil and gas company focused on conventional assets in the Permian Basin, mainly the Central Basin Platform and Northwest Shelf. It uses modern drilling and completion methods to improve older fields, extend well life and raise recovery. The #2 Ranked company operates more than 96,000 net acres and has built a large, mostly operated asset base. Its strategy centers on steady cash flow, disciplined spending and lower operating costs. Ring has more than 500 identified drilling locations, over 10 years of inventory and a reserve life above 20 years. Recent results show production in line with guidance, cost reductions and continued positive adjusted free cash flow. The Zacks Consensus Estimate for the company’s 2026 earnings per share indicates 57.9% year-over-year growth. Over the past 60 days, the Zacks Consensus Estimate for Ring Energy’s 2026 earnings has moved up from 22 cents per share to 30 cents. Price and Consensus: REI APA: APA Corporation explores for and produces oil and natural gas through subsidiaries in the United States, Egypt and the United Kingdom, while also pursuing offshore opportunities in Suriname and other areas. Its portfolio is anchored by the Permian Basin and Egypt, giving the Zacks Rank #3 (Hold) company a steady operating base and room for long-term growth. APA focuses on safe, efficient and responsible operations, backed by financial discipline. It plans to return at least 60% of free cash flow to investors through dividends and share buybacks, while reducing debt. Growth plans include first oil from Suriname’s GranMorgu project in mid-2028 and continued cost savings across operations. The Zacks Consensus Estimate for the company’s 2026 earnings per share indicates 48.5% year-over-year growth. Over the past 60 days, the Zacks Consensus Estimate for APA’s 2026 earnings has moved up from $4.28 per share to $5.60. Price and Consensus: APA Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report APA Corporation (APA) : Free Stock Analysis Report W&T Offshore, Inc. (WTI) : Free Stock Analysis Report Ring Energy, Inc. (REI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research